THE POLITICS OF BUSINESS: A PLAYBOOK EMERGES
In our hyper-polarized environment, business has become highly politicized, creating a new realm of competition that demands speed, values and alignment.
less than 24 hours afSHORTLY AFTER MIDNIGHT ON MAY 30, 2018, ter a racist tweet had led ABC to strip Roseanne Barr of her popular TV show, the actress took to Twitter once more and blamed Ambien, the sleeping pill made by French pharma company Sanofi, for her lapse of judgment. Soon thereafter, the company tweeted its blockbuster response: “People of all races, religions and nationalities work at Sanofi every day to improve the lives of people around the world. While all pharmaceutical treatments have side effects, racism is not a known side effect of any Sanofi medication.”
This short statement was retweeted almost 100,000 times and featured prominently in leading news outlets like CNN, USA Today and the New York Times. “This one tweet generated more kudos internally than anything I have been involved in in my professional career,” Angie Bechan, vice president and head of communications for Sanofi North America, told us. “It was different from the norm — a company taking a stand to defend its values. We saw it as an egregious attack on our values and we stood up for our employees and patients. It generated tremendous pride and people still tell our employees how amazing that tweet was when they find out that they work at Sanofi.”
Conventional wisdom has held that business should keep a low profile on divisive political issues. Why risk drawing the ire of politicians, pundits, customers, shareholders or employees by wading into non-business concerns? And yet, Sanofi’s leaders reached the opposite conclusion. “This went so blatantly against our values,” Bechan explained, “that the risk of not saying anything and letting it stand out there was far greater than any backlash.”
Sanofi is not alone. Consider sports retailer Dick’s. Two weeks after the horrific school shooting in Parkland, Florida, in February 2018, the company’s CEO, Ed Stack, announced that Dick’s stores would no longer carry assault rifles or high-capacity magazines, or sell guns to anybody under 21. “To think about the loss and the grief that those kids and those parents had, we said, ‘We need to do something’,” Stack explained.
Like Sanofi, Dick’s was prepared for potential backlash: “We knew that this wasn’t going to make everyone happy.” But potential blowback did not stop them. Nor did it stop Walmart CEO Doug Mcmillon from criticizing President Trump’s handling of violence in Charlottesville, Virginia, in 2017. Mcmillon chastised Trump for missing “a critical opportunity to help bring
our country together by unequivocally rejecting the appalling actions of white supremacists.” Mcmillon has stepped out on a host of issues: opposing ‘religious freedom’ laws as discriminating against gays, calling for stricter gun controls and embracing an ambitious climate change agenda.
It’s a dramatic change for a company that once sought to keep a low profile, for years eschewing a Washington, DC office. But it was Mcmillon’s predecessor, Lee Scott, who recognized the new era, declaring in 2005, “Over the years, we have thought that we could sit in Bentonville, take care of customers, take care of associates and the world would leave us alone. It just doesn’t work that way anymore.”
The company’s own research found that 72 per cent of Walmart customers expect it to ‘take a stand on important social issues’ and 85 per cent agree that it should ‘make it clear what values [it] stand[s] for.’ According to Tony Rogers, Walmart’s chief marketing officer, “It’s maybe more important than ever to let people know what it is we stand for and be out there in communities.”
From the Gridiron to the Pitch
How can executives make sense of this new era? Business has always been political to a degree, but the game has changed dramatically in the last decade. The contrast between the old rules and the new game is as stark as the differences between American football and European soccer. While the objective of the two games is the same — outscore the opponent — the play and strategies of the games are vastly different (see Figure One).
Traditionally, business-political engagement has been waged like American football. Teams like the 49ers or Patriots, armed with sophisticated game plans developed with experts and scouts, engage in a highly structured, stop-and-go Gridiron contest directed from the sidelines by specialist coaches that have mastered the arcane rules of the game. That’s a pretty good description of how corporate giants like Boeing, GE and Exxonmobil have engaged in politics. Working alone or through industry associations like the U.S. Chamber of Commerce, they have deployed squads of specialized lobbyists and lawyers, who have mastered the complex rules of Congress and the Executive Branch, to execute a political game plan designed to score a regulatory win for corporate CEOS calling shots from the sidelines.
In stark contrast, the new politics that Sanofi, Dick’s, Walmart and others are stepping into today is more akin to European soccer. While there are game plans, once a game is underway on the Pitch, improvisation and fluid adjustment are the norm, not the exception. Coaches must empower their players to make decisions on the fly as play abruptly shifts between offence and defence.
In fact, the best teams are most effective when good defense enables a lightning-fast offensive counterstrike, a tactic companies are adopting. As Sanofi’s Bechan told us: “Speed absolutely mattered. It showed we didn’t do focus groups, look at sales data or anything like that, and therefore gave our response authentically.” Pulling this off required readiness, effective teamwork, a high degree of alignment and empowerment:
We monitor social media 24/7 and saw Roseanne’s tweet first thing in the morning. My team huddled, agreed we couldn’t sit still as our product was being used to justify something so egregious, and decided to draft a response. We quickly ran it by the heads of legal, regulatory, HR and external affairs and everybody felt this was the right thing to do. Legal had one proposed edit — ‘not a known side effect’ as opposed to just ‘not a side effect’ and that made the tweet even punchier.
Speed, values and alignment were equally critical when Lyft outplayed its rival Uber in January 2017. In protest over President Trump’s ‘Muslim ban’, taxi drivers went on strike at New York’s JFK Airport, where hundreds of demonstrators had assembled. Uber announced via Twitter that it would turn off surge pricing — a move intended to avoid looking opportunistic. It had the opposite effect. Social media users assumed that Uber was undercutting the taxi protest, an assumption reinforced by then-ceo Travis Kalanick’s post-election embrace of the Trump Administration. Before long #Deleteuber was trending. As play shifted, Lyft CEO Logan Green quickly exploited his competitor’s weakness, stating:
Lyft has worked hard to create an inclusive, diverse and conscientious community where all our drivers and passengers feel welcome. Trump’s immigration ban is antithetical to both Lyft’s and our nation’s core values.
72 per cent of Walmart customers expect it to ‘take a stand on important social issues’.
The official @Lyft account immediately retweeted Green’s comments and the company soon followed up with an official statement titled “Defending Our Values”, which pledged to “not be silent on issues that threaten the values of our community.” Moreover, as the #Deleteuber campaign gained steam, Lyft doubled down, announcing a $1 million donation to the American Civil Liberties Union, whose lawyers were working to help people affected by the ban. Before long, downloads of Lyft’s ridesharing app surpassed Uber in the Apple store for the very first time as part of the largest market share swing from Uber to Lyft yet.
The big difference between Uber and Lyft was Kalanick’s embrace of Gridiron-style politics and lack of appreciation for the Pitch. Under his leadership, Uber tripled its investment in lobbying and, following the election, Kalanick eagerly joined Trump’s business advisory council despite vocal opposition from his employees. This left the company unprepared when politics moved from the Washington Gridiron to the Pitch.
“I’ve been asking myself why people believed this Twitter user [who asked users to #Deleteuber following the surge price tweet] rather than give us the benefit of the doubt,” Uber communications executive Matt Wing told us. “I think there are two reasons,” he added: “First, our reputation as a company, and especially of our CEO, was not great at the time. You don’t get the benefit of the doubt unless you have earned it. And secondly, in the first few days of the Trump Administration, many people felt powerless. They were looking for a way to fight back, and deleting the Uber app made them feel good even if it achieved nothing.”
What’s Driving the Shift?
What accounts for the rise of the Pitch as a political venue that managers must now master? Our research and work with senior executives suggest that a combination of political partisanship, millennial preferences, social media and a trend towards valuesbased branding are key.
As Uber’s Wing points out, there is widespread frustration with the gridlock arising from the polarized politics in Washington, DC and other capitals. Citizen/consumers and citizen/ employees increasingly expect business to act when government won’t. Dick’s CEO Ed Stack pointed to gridlock as a reason for taking action on gun violence, saying, “We don’t want to see the partisan politics where one side espouses their position and another side espouses their position and they actually never do anything.”
Executives can mostly thank Millennial and Gen Z customers and employees for the expectation that business act on political issues. A recent survey found that 47 per cent of Millennial Americans believe CEOS should speak about important social issues, compared to just 28 per cent of Gen X and Baby Boomers. Similarly, Millennials are almost twice as likely as Boomers to say they will buy from a company whose CEO takes prominent positions on social issues. And they are almost three times as likely to be more loyal as employees to such a company.
Of course, Millennials’ embrace of social media allows these preferences to reverberate throughout the Twittersphere. In the heyday of Gridiron politics, executives assumed that a manageable thing called a ‘news cycle’ existed. But the days of the press release are long gone. On today’s Pitch, companies are communicating continuously, even — and sometimes especially — when they remain silent.
The emergence of values-based branding is both responding to these trends and accelerating them. Companies like Patagonia and Nike are moving beyond lifestyle branding to
infusing a sense of purpose into their business. Long a sustainability champion, under the leadership of CEO Rose Marcario, Patagonia has become an aggressive conservationist, vowing to “take every step necessary, including legal action, to defend our most treasured public landscapes from coast to coast.” This is the kind of corporate political activism that resonates with — and is increasingly expected by — the company’s outdoorenthusiast customers.
Similarly, Nike deliberately committed its ‘Swoosh’ to a highly charged political issue when it made former NFL quarterback and political activist Colin Kaepernick the face — and voice — of a high-profile ad campaign, signalling that Nike shared the values of its young, urban, multiracial customers.
Putting values at the fore like this only works when companies are seen as authentic and consistent over time — which all but guarantees the need for ongoing actions to defend and reaffirm the brand’s principled positions as new issues emerge.
Becoming a ‘Two-sport Athlete’
While the Pitch will continue to gain in prominence, the Gridiron is not going away. In fact, under President Trump, the returns on government lobbying appear to have increased. For leading enterprises and their CEOS this means being competitive in both arenas. Companies need to become ‘two-sport athletes’. However, our research suggests that most politically savvy firms rarely master both games. The reason is that the assets, talent and organizational capabilities required for each differ considerably.
Talentwise, the Gridiron is staffed by experienced lobbyists, lawyers and public affairs experts who frequently work at arm’s-length from the core business. In contrast, mastery of the Pitch is anchored on communications, stakeholder engagement and corporate citizenship functions that must be woven into the business fabric to be effective. Success on the Gridiron is about careful planning and leaving little to chance, whereas the fluidity of the Pitch requires quick action often with considerable uncertainty over eventual outcomes. CEOS rarely take centre-stage on the Gridiron, but their personal leadership is often central to Pitch performance.
How can companies enhance their Pitch capabilities and move closer to the ‘two-sport athlete’ ideal? Our work leads to five recommendations: 1. HAVE CLEAR VALUES AND PLACE THEM AT THE HEART OF EVERYTHING The starting point for every successful Pitch performance studied for this article was a clear statement of how the firm’s values compelled action, regardless of the consequences. In contrast, Uber’s Pitch debacle arose because stakeholders made inferences about the firm’s values and motivations based on the CEO’S personal behaviour. Using values as an organizational North Star is always powerful, but they serve an additional role on the Pitch. To be effective, companies must align their actions with the concerns of the diverse stakeholders they encounter in the political arena. Social psychologists have found that one way to bring diverse interests together is through ‘superordinate goals’, which are shared higher societal values like human dignity, tolerance, fairness, justice or responsible stewardship of the planet.
2. EMPOWER YOUR TEAM TO COMMUNICATE
The Gridiron playbook calls for careful, scripted communication, ensuring the firm ‘speaks with one voice’. Yet research has found that canned messaging by CEOS and professional spokespeople are considerably less credible than ordinary employees. So while CEOS must lead on the Pitch, it is equally important that employees are empowered to speak — on social media and in person — in the moment, as issues arise. Notice that in the case of Sanofi, the statement came from the firm’s U.S. team, not the Paris-based CEO.
3. BUILD SYSTEMS, PROCESSES AND A READINESS POSTURE Challenges and opportunities on the Pitch can present themselves at any point and acting authentically on brand values is key. Part of this perception stems from an unexpectedly quick response, something that requires having organizational systems in place that make this possible. Most firms actively monitor social media, yet few have processes in place to quickly pull the trigger when a challenge or opportunity arises. Within hours of its CEO weighing in during airport protests surrounding the ‘Muslim ban’, Lyft’s team made a public commitment to support the ACLU to further underscore its values and willingness to lean in — all of which sharpened the contrast to its bigger rival Uber. Likewise, Sanofi’s response to Roseanne Barr was not held up waiting for sequential departmental approvals. A quick huddle among key department heads sufficed.
There is widespread frustration with the gridlock arising from the polarized politics in Washington, DC and other capitals.
4. EXPLOIT CROSS-ARENA SYNERGIES
One company that shows the benefits of being a Two-sport Athlete is Tesla. The electric vehicle maker has long been a Pitch darling, engaging with a broad range of stakeholders to “accelerate the world’s transition to sustainable energy” (the company’s stated purpose). But Tesla is also a Gridiron force, employing an active lobbying, legal and public affairs strategy to circumvent U.S. franchise laws that threaten its strategy of selling cars directly to consumers. These Gridiron efforts have been synergistically supported on the Pitch by Tesla owners’ clubs working alongside environmental groups to back up CEO Elon Musk’s claims about his products’ distinctiveness and resulting need for integrated sales channels, helping the company fare well in both the court of law and the court of public opinion.
5. FINALLY, PLAY THE LONG GAME
Authenticity on the Pitch comes from consistency. Much of Patagonia’s credibility is due to its decades of outspoken environmental leadership, starting with its pioneering 1988 campaign to protect Yosemite Valley from commercial development. Walmart’s surprising credibility on the Pitch is the result of an almost two decades effort to reinvent the company as a sustainability champion, using its sheer size — long the central point of criticism — as an enabler of positive change. As Walmart CEO Mcmillon puts it, “We are not perfect, but we are a force for good, and things are better because we are here” — a view shared by a growing number of environmentalists. Similarly, Lyft’s ability to exploit Uber’s fumble was rooted in several years of drawing a deliberate contrast with its rival, from the pink moustaches initially attached to its cars and a public commitment to community engagement to a less aggressive posture in lawsuits and local regulatory proceedings.
In closing
As the Boston Consulting Group has proclaimed, “The business of business is no longer just business”. The emergence of the Pitch as a new locus of competition shows just how political business has become in our hyperpolarized environment. While the Gridiron has clearly lost its monopoly, it is not going away. Leading firms will therefore have to master both arenas, leveraging synergies across them with an entirely new playbook.
It was precisely this kind of innovation that fuelled Germany’s 2014 World Cup triumph. Coaches employed pre-rehearsed plays designed with big data analytics — courtesy of German IT powerhouse SAP — that systematically surfaced opponents’ weaknesses. In other words, the German team excelled by bringing a dose of American football — set plays powered by statistics — to European soccer.
Of course, advantages today can be fleeting. Lest it be forgotten, Germany followed its 2014 World Cup triumph with a most humiliating defeat just four years later — a reminder that competitive advantage must be won every season, whether on the Gridiron or the Pitch.